October 9, 2002
CLA-2-62:RR:NC:WA:355 I86974CATEGORY:CLASSIFICATION
Mr. Arthur W. Bodek
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 245 Park Avenue
New York, NY 10167-3397RE: Classification and country of origin determination for men’s woven shorts; United States – Israel Free Trade Agreement; 19 CFR Section 12.130; 19 CFR Section 102.21; General Note 8, HTS
Dear Mr. Bodek:
In your letter dated September 30, 2002, you requested a tariff classification ruling and a country of origin determination for four garments that will be imported into the United States on behalf of your client, Sumithra Garments (Pte), Ltd. The samples submitted with your request will be returned.FACTS:
You submitted samples of styles 1517, 15171, 1519 and 1530. All of these shorts are made of 100 percent cotton woven fabric. Styles 1517, 15171 and 1519 are made of cotton twill fabric. They feature two front and two rear inserted pockets, a waistband with belt loops and contrasting piping , a zippered front fly and a left over right button closure at the waist. Style 1530 is made of cotton denim and it features two front and two rear inserted pockets, a waistband with belt loops and contrasting piping, a zippered front fly and a left over right button closure at the waist.
The woven fabric for the garments will be sourced in Hong Kong for styles 1517, 15171 and 1519, and in Indonesia for style 1530. The pocketing fabric and woven trim fabric will be sourced in India, Sri Lanka and Hong Kong. The fabric will be sent to Israel. In Israel the fabric will be cut into component parts for the shorts; the components will then be sent to and assembled in Sri Lanka. The completed garments will be shipped directly to the United States from Sri Lanka.
Issue:
What are the classification and country of origin of the garments?
Classification:
The applicable subheading for the shorts, styles 1517, 15171, 1519 and 1530, will be 6203.42.4050, Harmonized Tariff Schedule of the United States (HTS), which provides for men’s or boys’ trousers, bib and brace overalls, breeches and shorts, of cotton, other, other, shorts, men’s. The rate of duty will be 16.8 percent ad valorem.
The textile category designation for styles 1517, 15171, 1519 and 1530 is textile category designation 347.
The designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes. To obtain the most current information available, we suggest that you check, close to the time of shipment, the Status report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. §3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
EXCEPTION FOR UNITED STATES-ISRAEL FREE TRADE AGREEMENT:
You have stated that the woven fabric is cut into garment parts in Israel. Section 334(b)(5) of the Uruguay Round Agreements Act provides that:
This section shall not affect, for the purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.
Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 C.F.R. §12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.
Accordingly, pursuant to Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textile and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the article last underwent a substantial transformation. Substantial transformation occurs when an article is transformed into a new and different article of commerce by means of substantial manufacturing or processing.
Section 12.130(d) sets forth criteria for determining whether a substantial transformation of a textile product has taken place. These criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.
Section 12.130(d)(1) states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in: (i) Commercial designation or identity,
(ii) Fundamental character, or
(iii) Commercial use.
Section 12.130(d)(2) states that for determining whether the merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered: (i) The physical change in the material or article; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; (v) The value added to the article or material.
Section 12.130(e)(1) states, in pertinent part, that an article will usually be a product of a particular country when it has undergone in that country: (iv) Cutting of the fabric into parts and the assembly of these parts into the completed article; or (v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which were cut from the fabric in another country into a component garment. (e.g., the complete assembly and tailoring of all cut pieces of a suit-type jacket, suit or a shirt).
It is the consistently held position of Customs that the cutting of fabric into garment parts is a substantial transformation of the fabric and that those garment parts become the product of the country in which they are cut. It is also the consistently held position of Customs that when garment parts are cut in one country but the garment in assembled in another country, unless the assembly operation is a substantial assembly such as that referred to in Section 12.130(e)(1)(v), the country or origin remains the country in which the garment parts are cut. See, for example, HRL 088235 dated March 15, 1991, and the rulings that are cited in that ruling.
In this case, since the fabric is cut into garment parts in Israel, Israel is the country of origin for all styles of the imported apparel. This is because in Israel the woven fabric is substantially transformed into garment parts that are designated for particular articles of apparel, thereby creating a new and different article of commerce. The mere assembly of goods on the other hand, is not enough to substantially transform the components of an article into a new and different article of commerce.
"IMPORTED DIRECTLY" FROM ISRAEL:
Under General Note 8, Harmonized Tariff Schedule of the United States (HTS), products of Israel are eligible, when imported into the United States, for the "special" duty rate set forth in the tariff schedule only if each article is imported directly from Israel into the customs territory of the United States (General Note 8(b)(ii)). Since all the styles which are the subject of this ruling are shipped from Israel to China for final assembly of their component parts into the finished garments, these styles do not qualify for the "special" duty rate.
Holding:
The country of origin of the garments is Israel. Based upon international textile trade agreements products of Israel are not subject to quota nor the requirement of a visa. The garments are not eligible for the “special” duty rate as they are not imported directly from Israel.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 C.F.R. §177.9(b)(1). This sections states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 C.F.R. §177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 C.F.R. §177.2.
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Camille R. Ferraro at 646-733-3046.
Sincerely,
Robert B. Swierupski
Director,